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tv   Tonight From Washington  CSPAN  March 17, 2011 8:00pm-11:00pm EDT

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his agency wouldn't be able to handle a nuclear emergency similar to the events unfolding in japan. administrator craig fugate did say that the government as a whole is better prepared to deal
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with radiological emergencies. after years of doherty bomb scenario training. at the senate homeland security committee hearing, we also hear about what fema has done since the japanese earthquake. another witness at a hearing is the former inspector general of the homeland security department. we hear his assessment that the fema operations center can katrina. this is two hours. >> welcome, everyone. we convened this hearing which had been long planned, laskier alana fema's ability to respond to a major catastrophe against the compelling backdrop of the tragically catastrophic event unfolding in japan. an earthquake and tsunami and rapid succession that had already resulted in twice as many deaths as al qaeda's attack on america 9/11 and of course no one believes that the deaths and
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the finding of the day is over yet. the earthquake and the tsunami have also caused fires and explosions of nuclear power plants that could have nightmares consequences for japan and perhaps other countries as well. japan has been considered the gold standard of earthquake preparedness because they had repeated experience with earthquakes, but this earthquake registered 9.0 on the richter scale. when i say that i always remember the great san francisco earthquake was apparently 7.6 on the richter scale so you can imagine the consequences here. the ways of disaster set off by this earthquake in japan have exceeded the country's extraordinary preparations. so the event of the past week in japan lind a sense of urgency to our hearing today and as we
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asked how well-prepared is america for a catastrophe perhaps women equal to that occurring now in japan. our committee called its 2006 report about fema's response to hurricane katrina, quote, a nation still unprepared, and of quote. and we were unprepared and that lack of preparedness shook the confidence of the american people who naturally asked why their government couldn't help some of their fellow citizens when they needed it the most. this committee's extensive investigation into the failure of all levels of government to prepare for and respond effectively to hurricane katrina found a long and troubling of the list of problems, not least of which was that fema, in our opinion, was not and never had been capable of responding to a catastrophe like hurricane
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katrina. and here is where i learned when it comes to emergency preparedness and response, two birds that i thought the same disaster and catastrophe. preparedness for most disasters which fema was and certainly is capable is different from preparedness for catastrophes like katrina. after the investigation the committee drafted in congress passed the post-katrina emergency management reform act of 2006. our aim was to rebuild fema into a stronger more capable agency. five years later, i am convinced fema has in fact become stronger and more capable. to respond adequately to catastrophe like the one currently in japan struck the united states i think that is
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the question we want to ask our witnesses today. last september than inspector general of the department of homeland security richard skinner released a report on fema's transformation since katrina. mr. skinner since retired from public service after a long and distinguished career. but his report, and he is fortunately back with us to testify today. his report concluded last september that fema has made some form of progress in almost all areas where reform was needed but the fema's management to speak broadly still needed improvement. while today's hearing is focused on fema, i think it's important to say that response to and recovery from a disaster or a catastrophe and the united states is the responsibility of a lot of other agencies and other people besides fema. other federal agencies, state
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and local devine, the private sector and in fact in some sense every effect america has willes to play. and many of them also need to improve their capabilities. on a positive note, just recently the department of defense and homeland security and the congressional remanded council of government recently signed off on a very important plan establishing clear rules for when the national guard and military forces can jointly respond after a disaster. and this means in a large disaster catastrophe we will have the ability to call on the resources of the department of defense and a more timely and effective manner. five years after katrina, again, i think we're better prepared for a catastrophe than we have ever been. the epic disaster of japan
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reminds us fema must continue to improve as both old and new threats loom some from nature like the earthquake and the tsunami and others from human enemies like the one we face on 9/11, 2001. i know administrator fugate and the public servants he works with will continue to chart a successful path forward. >> senator collins? >> thank you, mr. chairman. the earthquake and tsunami that struck japan last week destroyed the entire communities, killed thousands of people and caused the release of radiation at the nuclear power plants. our thoughts are with the japanese people and with of the rescuers and responders including units from our own country.
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this horrific natural disaster and nine -- reminds us we need to do our best to prepare for the unpredictable. and that is the focus of today's hearing. in the past year we have witnessed three disasters involving the development and the use of energy resources. the proper word probably is a catastrophe says as the chairman has said. first, the explosion aboard the deepwater horizon oil rig last spring led to economic and environmental damages that have yet to be completely tallied. a west virginia coal mine explosion killed 29 people in all guest and was the worst in his decades. now there is uncertainty and fear in japan about the amount
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of radiation emitted from the nuclear power plants in the area hit by the tsunami. in addition to the humanitarian crisis, the aftermath of the earthquake has raised concerns about the safety of nuclear power at a time when it is being revisited as an alternative to fossil fuel and as a means of luring greenhouse gas emissions. regardless of whether a disaster strikes our energy supply or another sector of our economy as part of our nation we need to be prepared. we don't know when the next disaster will hit. we do know that the u.s. geological survey estimates that within the next 30 years the
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probability is 94% that an earthquake of 7.0 magnitude or greater will occur in california 94% chance of that. we know inevitably there will be hurricanes, floods and tornadoes coming and we have recognized that a terrorist attack using a weapon of mass destruction in a large city would certainly strain our capability. today i look forward to hearing from our witnesses how well he quipped the united states is for any catastrophic disaster regardless of the cause. what is the level of our preparedness to protect important energy sources? what are we learning from the nuclear accidents in japan and the gulf coast oil spill in the
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past year? how well are we prepared for a major earthquake in this country? do we have the communication and medical systems necessary to respond to the explosion of a dirty bomb? more than four years ago, congress enacted the post-katrina emergency management reform act which the chairman and i offered that. that bill was designed to take the heart learned lessons of hurricane katrina and bring about improvements in our nation's overall emergency preparedness response systems. and our law has indeed been proved fema's disaster response capability. from major floods to wildfire we have witnessed improvement throughout the country. in me and i saw firsthand this
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progress in fema's responses to the patriot state storm of 2007. spring, 2008 flood in erisa county, and other disasters since then. fema certainly has become a more effective and better lead agency during the past four years. but nevertheless, questions remain about our ability to handle a mega disaster. i also have serious concerns about fema's stewardship of federal funds. one of those hard-earned lessons from the aftermath of hurricane katrina was that fema's assistance program were highly vulnerable to fraud and improper payments. our committee with the assistance of the theology and
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the gao documented more than a billion dollar investment funds. in some cases that taxpayers' dollars were literally gambled away. funds were also spend on liquor, the longest and by could diamond engagement rings. fema pays millions of dollars for housing assistance to hundreds of applicants who apparently resided in the state and federal prisons. while victims certainly should receive prompt, appropriate relief, fema needs to strike a careful balance between expediting relief and ensuring that criminals do not defraud the system, and that means having strong internal controls. unfortunately, safeguarding taxpayers' dollars remains an area in which fema has yet to
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achieve success. a december 2010 report by the inspector general revealed fema stopped recovering the disaster assistance payments made by after hurricane katrina and rita and subsequent disasters. the oig identified approximately 160,000 applicants that had received improper disaster assistance payments totaling more than $643 million. the efforts to recoup these improper payments ended in 2007 after a court found that its recovery procedures were inadequate. more than three years later a new process were recovering these payments has only been initiated this week. i do want to point out some
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bright spots in the september 2010 dhs inspector general report. in particular, the ig found that fema had made substantial progress coming and we see it on the chart in improving emergency communications. ensuring that first responders can communicate during a disaster is vital. when the communications field after 9/11 and during hurricane katrina it caused lives. the ig also highlights the effectiveness of the regional emergency communications working groups in each of the ten fema's regions. since i pushed very hard for this reform i'm very pleased to see the progress that has been made. this october will mark the fifth anniversary of the post-katrina emergency management reform act. by that time i hope that fema
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will have made significant progress and improving our nation's preparedness for the next catastrophe. finally i want to join the chairman in thinking of a former inspector general scanner for his extraordinary service not just to the department but throughout his career to our country. he's been a valuable asset as our committee conducted its investigations and oversight at the department, and i'm grateful for his aggressive approach to combating waste fraud and abuse and helping to improve the management of programs at the dhs. so, mr. skinner, thank you. >> senator landrieu, you have been so involved in these matters regarding fema since hurricane katrina. would you like to make an
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opening statement? >> thank you, mr. chairman and ranking member i appreciate it because it's got to get back to the floor managing a bill and i am unable to stay for the remainder of the hearing. so i really appreciate it and i will try to be very brief, but there are a few important things i would like to share. first of all, i think the calling of this hearing is very important and i thank the chair and ranking member. their attention after the katrina and rita and gustav and ike have been important as we try to recover along the gulf coast and other states and communities. and your efforts have strengthened fema's management opportunities. but i do want to point to a couple of things i'm concerned about. looking at the situation, mr. chairman, in japan, reminds us again disasters of large magnitude, catastrophic disasters can and will occur,
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and what concerns me is right now in this capital there are efforts to significantly reduce funding for the department of homeland security, in particular, the funds for fema and for the derf fund which is disaster emergency fund. it doesn't make sense to me the house of representatives would cut funding from this important program. we now or in the position, mr. chairman, to be able to be asked to use $101.5 billion as needed just to meet the cost of eligible products for this year so we are basically paying for projects of past disasters usiny money that we are supposed to be using to prepare for future're
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disasters. now i sent a letter to the diesident and i very much would like you and the ranking member to look at thissent letter to cn this letter if you could becausm we aree going to find ourselves back in the same position thatrg we were before katrina struckwee which is under funding for the future disasters and not being diady when it happens. specifically, and i will submit the rest of the record of the house resolution is cutting $68 million of i.t. funds$68 ranking senators no's plight fisa six ackley the money thata is necessary for fema to keep ua their computer software and reporting mechanisms to cut dow on the fraud and abuse. so on the one hand, we areown asking them to come down hard o the fraud and abuse. we're on the other hand, we are taking away the money that enables the tofr do that. that isn't right, and it's nottg fair.ay their
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in addition, it is projected that we are going to run out of, money three months before theint hurricane season starts. this happened last year,ricane season starts. this happened last year, mr. chairman. if we don't weigh in with the administration and with our colleagues on both sides of the aisles, it's going to happen again. the only final thing i'll say, and i'm looking forward to reading the details of the report, there is some encoura encouraging news, mostly because you and senator collins have done such a good job staying on point, i'm proud that i held dozens of hearings in four years on this exact subject and hopefully some of the hearings that we held contributed to some of the steps that have been taken to improve, but on the issue of fraud and abuse, i just want to submit to the record and i know that senator collins is very concerned about this, and i am too, but on behalf of many people in the gulf coast, i have to just add to the record, that some people are being accused of
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fraud because they could not provide title to their home or insurance documents. i mean, in floods and in earthquakes, documents are lost. some people are being accused of fraud or put in the column of fraud because they couldn't provide free and clear title to their home. it's been in generations for years. they simply don't have a clear title among several generations. there's some that are in a column or a cue for fraud and abuse just because there's a mix-up or admission of names like junior instead of senior or senior instead of junior or boulevard, drive or highway as opposed to what it's supposed to be. i know that fraud is a serious issue. i join senator sessions and others in clamping down, raising the fines, increasing the penalties for people that would try to gain the system. it's particularly horrible, i think, for people to try to game a system in the middle of a disaster. their penalties should
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significantly be higher in that regard. and they are. but we have to be careful, calling some of these misclassifications fraud when they really aren't in my definition of fraud. and finally, when we go to collect this money back, particularly senator snowe, i just want to say, that i hope that the money we put into collecting these, you know, these funds back, are cost effective because some of these funds were put out in a thousand dollars or $2,000 and there are hundreds of thousands of people that we may have to track down. i know letters went out this week for 5,000. but let's just be careful that when we seek to get the money back, it's a good expenditure of taxpayer dollars and not just throwing bad money after good money after bad. i'm going to submit the rest of the record. i thank you very much to the chairman and to the ranking
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member. >> thanks, senator landrieu, for coming off the floor while you're managing the small business bill, but also for your leadership of the subcommittee and we'll continue to try to carry forward with your assistance. thank you. let's go to the witnesses. again i thank you for being here, all three of you. we'll begin with the honorable craig fugait, administrator, federal emergency management agency at the u.s. department of homeland security. good afternoon. the question is, how ready is fema for the next big disaster? >> thank you, mr. chairman, ranking member collins, and senator landrieu. in response to the event, i'm going to try to go through my oral statement here and give more time to questions. i think this is really, i think, a better setting for the questions that you have in response. but just kind of a summary. you know, we've been looking at this since i've been at fema
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from the standpoint of planning and what do we do in a catastrophic response? as you pointed out we respond to a lot of disasters and implemented the stafford act to provide assistance. that's not the same thing as a response that requires a coordinated federal where we have a lot of different resources that have to go quickly to an area where we may not have a lot of information. looking at the back drop of what's happened in japan and again, you know, i can't even imagine what my counterparts are doing, how they're standing up to this. this is what we are in the business for. it's the most challenging thing you can deal with. not only the losses, but our counterparts knowing what they're going through now and the challenges they're facing and trying to step back from that and go what if it happened here and what would we do? from that approach, will be the thrust of my comments. the thrust of my comments. we have been supporting, as you know, the lead for international response, international development, in support role to the teams that have gone to
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japan top assist in search and rescue. the urban search and rescue teams, again, authorized as part of fema. 28 team, two of which are dual supported by both us and uscid, designated the international response teams, that have been to haiti, most recently christchurch and now into japan. we stand by the uscid but japan is an industrialized city. the events that remind us disasters, you point out, don't always give warning or follow with season and often don't happen where we have expected to have the worst impacts. for that reason, a term we use in fema is we can't plan for easy. we have to plan for real. we cannot look at what we're merely capable of. we have to look at what the m y impacts would be to our communities and change the
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outcome. we put a lot of emphasis on the first 72 hours. we see this as key. we saw it in katrina and in other disasters. if aid is not reaching the people that need, it not secure, not able to do the search and rescue, not get there quick enough it becomes extremely different for the outcome of the survivors t survivors. to do this you changed things with the format that stated it was the intent of congress we would no wait for a system waiting for help, waiting to help. that the fema family could begin mobilizing when we determine something happened or think it's about to happen even prior to a formal request from the governor. we've used that provision numerous times since i've been at fema, from the american samoa tsunami to the flooding in tennessee, to most recently the tsunami issues issued for hawaii
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and the west coast in moving in prepositioned supplies as you directed us to do. >> talk a lot more an that. i think it will be interesting to people who are listening or watching on tv. >> well, previously, this is one of the findings and concerns you raised during katrina. it was not always clear, could fema begin moving resources particularly in tasking our federal family and moving supplies such as food, generators, cots, blankets prior to a greft a governor. in looking at that, you clarified under the stafford act at the direction of the president fema could activate and use the drf, the disaster relief fund to begin sending missions to various federal agencies as well as deploying resources. >> before anything happens. >> before anything happens. >> merely upon, the tsunami warning centers in hawaii and in alaska, began issues tsunami warnings -- >> last weekend. >> last weekend. last friday. actually, i got my call about 2:00 in the morning.
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and this then occurred a little after midnight our time. our regional office, region 9 which covers the pacific was already stood up. we made the decision we would stand up fully fema's support to the west coast and islands and territories. we began moving supplies out of our logistics centers which you've authorized to provide additional funding to have nor plies on hand. >> you got the centers disbursed around the country? >> yes, sir. strategically located around the country so we're closer to the areas we would need assistance. a facility at moffett field in california and began the process of getting supplies loaded up. >> what kinds of supplies? >> in this case we thought the primary event would be destruction along the coast. people displaced, people possibly in shelters. so we have a distribution center in guam, a distribution in hawaii and then the distribution we activated on the west doecoa to begin moving shelf stable
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food and one of the things that came out of the commission on children's disaster, we sent the shelf stable meals but don't send formula or baby foods, it's not help to the young. they mapped their greatest risk from tsunamis. like we do for hurricanes and map the coastal area, along the west coast they've actually mapped those areas at greatest risk for tsunami. we know where the populations areas would be and ra relative whisk. we didn't know how big the wave would be. given the magnitude of the earthquake, the size was one to suggest you could see as much as a 2 meter or almost 6 foot tsunami. this isn't like a wave breaking on the beach. if you saw the videos in japan you get the idea, a six-foot wall of water literally rushing in, pulling in, not going out and how devastating that could be. we also had folks in hawaii that went into the governor's d.o.c. in hawaii as he was activatingen
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evacuating his coast and had supplies ready to go there. this process comes back to the critical moments when we think there may be an event. we had a trigger we knew a major earthquake occurred. we knew the tsunami risk was there, had the forecast but didn't know the impact. we began moving the supplies based upon what we projected what we call our maximum maximum. the worst case impact we'd see along our coast, and began moving for that. again, it's a process that says we have sow understato understa close contact, communicating and doing it as a team. not just fema. talking to the admiral, to the state counterparts. anything they're concerned about or need to adjust. so this process really comes back to, i think, the heart of what you try to get to in post-katrina format. fema had to be more agile, able
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to build a better team, recognize a lot more capacity and capabilities than just what we bring but we have to move fastener these events. at the senator points out, we have to declare when are we stable and when do we need to engage safeties to make sure we're not going things that are no longer necessary. we define outcomes we want to achieve in this additional response such as life safety and life-sustaining activities. it goes back to one of the harder issue. had we can't do that we fault it back to the monetary assistance props because we couldn't get enough supplies in to meet the basic needs and found ourselves with not many options. part of this is working in partnership and also the private sector. the other thing we never did. we always came up way government response to disasters. never realized before that disaster happened in every community there were grocery stores, hardware stores, gas station, pharmacies. we would oftentimes plan our
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response ir. >> reporter:less -- irregardless of what they were doing. now they're part of the fema team and response center here in washington helping us coordinate with them so we don't compete with the private sector. we go where they're not, where they have the difficulties or destruction so we can focus our response on those areas of heaviest devastation, but also in the unique populations as you point out, mr. chairman, i know senator collins' fatalked about this before. people being prepareded. we talk about this as one of our spornts. i want people to understand why we tell people to be prepared. they're going to be heavily impacted areas that should not have to compete with sthoez these of us who could have been prepared an should have been ready. they shouldn't get in line behind us. those people that don't have the resources, that don't have the ability to do these things shouldn't get in line behind us bu we didn't get ready. these type of catastrophic disasters, the government needs to focus on the safety and
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security of the bottomless populations working with the rest of the crew, the organizations and businesses. it's important that the public recognizes to the ability that they can prepare so that those first critical days they're not competing with the most voweler inable impacted populations is key to our success. we talk about are we prepared for a catastrophic disaster? we've made significant improvements whip the tos toolsu have and have much work to be done. looking at the processes that need strengthen to ensure not only can we be rapid and fast as i like to say, we want to be fast. we want speed. we don't want haste, or we have waste and abuse to the system. thank you, mr. chairman. >> thanks, add minister fugate. we look forward to the question and answer period. mr. skinner, richard skinner, thanks for returning to capitol hill. it is your report of last
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september at fema's preparedness for the next catastrophic disaster. an update that led us to plan this marrying a long time ago. it comes obviously in the immediate context of the tragedy in japan. so it's just inevitable that we will be looking at the report based on what's happening there now, but it's a great piece of work. typical of the high standards that you reached throughout your career in public service and we welcome your testimony on the report now. >> thank you, mr. chairman. ranking member collins. it's a pleasure to be here again this afternoon. i don't really feel like i've retired yet and i've been spending a considerable amount of time actually preparing for this hearing, but it is a pleasure and honor to be here. i can't agree with you more. the tragic events that are unfolding today in japan is a stark reminder of hour important catastrophic preparedness is. can and will happen here.
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it's just a matter of when. if you asked me if we as a nation are better prepared than we 20 years ago, 10 years ago, even 5 years ago, the answer to that is, yes, of course we are. we've made tremendous strides, particularly over, like you pointed out, over the last four years since hurricane katrina. if you ask, are we as prepared as we can be or should be? then the answer to that is, no, we're not. fema has made -- while fema's made notable progress over the years it's doing so at least in my opinion at at snail's pace. after 32 years in existence and many years learned from past disasters, such as hurricanes hugo back in the late '80s and eric andrew in the late '90s and katrina in the earthquake at northridge, in the 9/11 attacks, we as a nation should be much better prepared than we are
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today. there does not appear in my opinion to be a sense of urgency with fema to turn words and plans into action. fema is an agency that in my opinion, my observations and my association with them over the last 20 years seems to be an agency that's always in a constant state of flux. at least during the 20 years that i know that i haven't been working with feel moo. many concerns outside of fema and with identified hurricane katrina, and nearly 20 years same, the same identified in its september 2010 update of katrina the disaster preparedness capabilities. they've created task group, working panels and counciling to develop remedial action plans to address these issues that produced libraries full of lessons learned, and draft documents, many shelved and took a back seat to the urgency of
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its missions demand, to respond to the latest disaster. consequently, momentum towards finalization and the implementation of key initiatives were slowed or lost altogether. the four issues i talked about today that concern me the most are, one, the failure of fema to build a strong management support infrastructure to sustain its disaster operations. this includes information technology development and integration. financial management's, acquisition management, grants management and human resource management. these functions are absolutely critical to the success of fema's programs and operations. yet whenever there is a major disaster or whenever fema is required to reduce its budget, these are the first activities to be cut as evidenced by the president's 2012 budget to congress. and the many budget cuts posed by congress itself over the years. this is short-sided in the long
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term will cost increase or raise the costs of disaster operations and disaster programs. it will increase fema's vulnerabilities to fraud, waste and abuse, adversely affect the quality of service the individuals and communities affected by disasters. in january of this year the dhs reported fema's -- i was still at the ig at that time -- we reported that fema's existing i.t. system was not integrated do not meet user needs ar are cumbersome to operate and do not provide the i.t. capabilities needed by users to carry out disaster operations, response and recovery operations in a timely, efficient and effective manner. furthermore, fema doesn't have a documented inventory of a system of support disasters nor does it have a comprehensive strategic plan with clearly defined goals for its components. program and field offices we
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found are continuing to develop i.t. systems independently of the cios office and slow to adopt fema standard i.t. development approach. without modern, integrateded systems, fema's hard pressed to perform at its best as evidenced by the fraud, waste and abuse that has plagued the agency since its inception. it cannot prepare timely and reliable financial reports from which to make financial or informed financial management decisions. cannot readily share critical information with its own ranks or with its federal partners, the federal, state and local levels. it cannot track its disaster workforce. the status of its mission assignments or work peeg performed by its contractors and grantees, at least not with any reasonable degree of reliability. until these issues are addressed people fema's taxpayer dollars wasteful spending and poor performance. similar to unneeded travel
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trailers after hurricane katrina or the millions paid to ineligible disaster assistance applicants or the millions paid to unscrupulous contractors. granted, fema recognizes and is attempting to remedy many of these problems and weaknesses and has actually made headway, because, as you can see, and have heard from the administrator today, the question is, however, does fema have the resolve and wherewithal to sustain those efforts? the ability of fema to do so is fragile. not only because of the early stage of development that these initiatives are in but also because of the nation's economic involvement in the constant destructions caused by the inordinate number of disasters fema must service each year. ness unless there's a sustained commitment, there is a good chance we'll talk about these same problems five or ten years from now. the second issue that concerns
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me is a lack of performance standards in metrics to measure the level of disaster preparedness at all level, federal state and local. in july 1993, 18 years ago, gao reported that fema had neither established performance standards nor developed a program for evaluating federal, state and local preparedness for catastrophic disaster response. until that is accomplished, before the gao, fema will not be able to judge the nation's readiness nor will it be able to hold itself or its state and local partners accountable. in 1998, 13 years ago, fema claimed to be in the process of developing a methodology for assessing hazard risks and escape capabilities. until this day, fema has not finalized this nor the performance of metrics in processes necessary to track and measure emergency management capabilities and performance. state and local governments received billions of dollars
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over the past eight years and are estimated to receive billions more over the years to come. either without a bona fide performance measurement system, it is impossible to determine whether these annual investments are actually improving our nation's disaster -- furthermore, without clear performance stands, fema lacks the tools knows make informed funding decisions. 's in today's economic climate, it's critical that fema concentrate its limited resources on those hazards that pose the greatest risks to the country. third, the third issue that concerns me is the lack of transparency and accountability in the use of the disaster relief funds and prevent fraud, wait and abuse of the funds. literally hundreds of audits and investigations over the years demonstrated that fema programs are extremely vulnerable to fraud, waste and abuse, yet fema still has not developed a robust program to curtail fraudulent
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use in its program. the extent of the taxpayer covering year after year, the past 20 years since i've been associated, is unacceptable and needs to be addressed aggressively. unfortunately, there's a long-standing mind-set with fema, with the fema rank and file that fraud prevention is the exclusive responsibility of the oig. many believe that fema's responsibility is simply to doll out funds to individuals and communities affected by a disaster. and it is the oig's responsibility to catch those who have received those funds through fraudulent mean. this flawed mindset a costing the american taxpayers millions of dollars each and every year. fraud prevention is a shared responsibility. in 2007, response to a new i.g. proposal, fema create add fraud prevention unit to address the
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complaints widespread fraudulent activity after four disasters struck florida in 2004. since then, renamed and placed in fema's office of the chief security officer. although the concept behind the fraud unit was sound it is understaffed, underfunded and lacks the latest in fire prevention technology to be effective. furthermore, organizationally buried in the bows of the ages and very little if think visibility between the rink and file. consequently, if utility is not fully unite liesed's feel mae noods to expand its scope of responsibility to includes after disaster relief programs nationwide and mandate fraud prevention training for all employee. this should help strike the balance between providing assistance and ensuring fiscal responsibility. a good model that fema may want to immolate is the one developed by the recovery accountability
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and trans, and also provide fraud and abuse from nearly $800 billion in economic stimulus recovery programs. with nine months of its creation, the board developed and put into place government-wide systems to provide transparency and accountability and to identify and prevent fraud, wait and abuse. ace a result of this, economic stimulus funds have been kept to an absolute minimum. there's no reason why a small agency such as fema cannot do the same. we as taxpayers deserve to know our tax dollars are not wasted and spent on fraudulent activities fop that end i believe fema should review and incorporate many of the precedent-setting measures used by the recovery board in order to assure proper payment of taxpayer dollars. i'm concern about the many
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emphasis placed on community outreach and awareness to provide hazardous projects and litigations. many consider this the core of emergency management. helping to prevent disasters or reduce the effects of disasters when they do occur. in the late 1990s, fema launched and aggressive community outreach and awareness campaign to educate the public about the importance of yid gatien and provide this for public and private sectors to collaborate on the development and implementation risk-based all hazard mitigation strategies and project it's. unfortunately, this initiative lost momentum dupe to the change in administration and the tragic events of 9/11. america's attention turned to fighting and preventing terrorism and mitigation faded into the background as an
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emergency management priority. as a result, fema is now struggling to bort and develop a strategy. to lessen the impact of a catastrophic disaster, mitigation needs to be held, again, as a top management priority. fema needs to relaunch its campaign to educate the public and its mitigation partners about the importance of developing and implementing mitigation strategies an programs. in conclusion, not withstanding the em initiatives under the way. in resolve, sustained effect, sisht strategy and program. fema's increased involvement in routine disasters coupled with the reasons economic downturn and the impact was having on government bfts at all letters, could easily derail the many
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kmishtives currently underpaper. were were -- mr. chairman, i'll be happy to answer any questions you my have. >> thanks, mr. skinner. that was directs as we expect from you. maybe i'd call it the tough love that we expect from a great inspector general. and when we get to the qs and as i'll ask mr. fugate if he wants to respond. our final witness is william o. jenkins jr., director of homeland security and just is issues at the gao. >> chairman lieberman and ranking member collins i appreciate the opportunity to be here today to discuss fema's efforts to measure, and assess, natur capabilities to respond to a natural disaster.
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my comments echo that of mr. skinner. the heart wrenching videos from japan vividly illustrate a catastrophic disaster. the response capabilities of the affected areas are almost immediately overwhelmed and substantial outside assistance kirchs assistance -- katrina response resources from almost every state in the lower 4. basically prepares for disasters required identifying what needs to be done, by whom and how well it should be done. more specifically, this includes identifying one, the nature of the risk faced in the pacific jeer graph gee graphic areas. two, the types and scale of the specific disaster arising, three, desired outcomes in addressing these consequences. four, the capabilities needed to achieve the desired help comes. five, whose should fund, develop and maintain specific
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capabilities, and six, metrics in which needed -- are needed tore deployment. details for who should do and and how the many players are managed an coordinated. training the performed assigned roled and capabilities should be coupled with exercises to test and assess the operational plan and identify areas of strengths and gaps that need addressed. federal government provides more than $34 billion to states, locality it's to prevent, respect, respond and recover from major disasters. post-katrina emergency management gave fema responsibility for leading the nation in developing a national preparedness system, developing measures of desired capabilities and assessing the resources need to achieve them. this is a complex and daunting task. as mr. fugate notes in many public presentations it is a task feel may may lead but whose
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partnership -- as well as the american public's in in december 202, the local state tribal and federal task force of preparedness agreed there was no method for assessing preparedness or to the engs tent federal grants enhanced disaster capabilities and preparedness. they suggested a three-year timeline with an associated task for developing net crick's pt sim -- fema charactered most of the methodologies its developed as guidance or tools that non-federal employees can choose to use or not. one result of this asproech that available data or a large self-reported, difficult to validate and not necessarily comparable across reporting jurisdictions and entities thus making it difficult. a picture of national preparedness. each of the efforts today has partially advantaged the ability
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to find and mischer. however, they have not been -- to access national preparedness as envisioned by the post-katrina act. until it does have an integrate the approach, fema will not have mpment of a disaster preparedness across the nation. nor will it be able to effectively target grant resources to the areas of greatest need and potential benefit. it is said in a a useful way -- with catastrophic response roles an responsibilities. fema embarked in a new initiative calmed whole of community which incorporates 13 corresponds with an emphasis on stabilizing a catastrophic disaster in effect in the first 72 hour. this approach will be tested in the national level exercise this year using a major earthquake on the new madrid fault.
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this whatever approach is used, thag be a designed end. assessing where we are in ability to achieve that and roles and responsibilities are clear and we rigorously test and periodically rei valuate the assumptions on which the sdamp planning is based. according to news accounts, japan experienced a significantly bigger earthquake and tsunami. than the one for which it had planned and prepared for the geographic area hit by the disaster. it faceded coupe la -- any one of could would have been considered a major disaster. all events provide opportunities for learning and assessment'. this is not different. this can be useful in our own future disaster planning and preparations. that includes my statement, mr. chairman and i'ding please to
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respond top questions your ranking member might have. >> thanks very much, mr. jenkins. it was a very helpful statement. were the min traitor, i want to give awe chance to response to the testimony of mr. skinner and mr. jenkins. i want to offer you also the opportunity to file written response to the -- we want to get to other questions. particularly on the various elements of management to respond to what mr. skinner said. >> well, thank you, mr. chairman. much of what is in the i.t. report we're not disagreeing with. i think, again, to say that we're not taking steps, wr are. and to say it's rot a-the results may not were there, but
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an oompg, ampexample. it was basically a piggy bank when i got involved used oftentimeses in way that was not the intent. we found ourselves funding positions that weren't tied to disasters oftentimes used, if something wasn't going right, go look at the drf when it wasn't a disaster. one of our first stepsing recognize what were no longer disaster work. funded particularly from the katrina era that had become something you'd already funded in positions. we worked with they to elimonite -- we had a two-year transition period and were successful do that. the other thing we looked at, the cost of disasters. in many cases we were setting up large numbers of folks to and
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bill built upon a con sthaept was already there. a virtual field office. work from the reach's and avoid that cost. doesn't slow down the response to do the recovery but it does reduce the overall cost how we administer the disaster itself. for fraud and waste we have been working to make sure that we have the acquisition staff. a large percentage of ouring kwa zigs staff is contractors. getting them over and served by. requiring that not only those people that by law are required to have avid training but require all female employees to take training annually. working on, pointed out, huge in response. katrina was not having strong acquisition and having people that can go out and ute nice -- appropriately that we could use in a disaster. and if we do have to do acquisition, these were things
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we haven't done yet. we take a lot to heart. a lot of the implementation are not as fast or smart as you'd like but i think we're moving forward. a big part of this, getting the staff hired and trained. and we're no longer responsible for the day-to-day management. looking at our management structure. in putting a higher priority on the backbone systems require to do the day-to-day businesses, but also support disaster response. sole while i will not disagree with the findings i found, i state it is not a black of record that may not be showing up if we continue to build that capability. >> we'll continue to monitor, obviously. after a period of time, come back and do another oversight hearing. hopefully not in the shadow of a catastrophic disaster. somewhere in the world.
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lt. go to some questions that have come off of what's happening in japan now. this will be obvious to you. fema's not responsible for the safety -- fema has responsibility along with other entities for being prepared to respond to an accident, at a nuclear power plant. the effect of weather was in this case earthquake cts or the terrorist attack on a pawer plants. >> i'm interested since wreev all concerned unnorly about weather reactors. whether the plans per response that you have are affected by the particular designs of nuclear power plants, or whether that gets to a level of -- of detail and nuance that, that's
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hard for you to get to. yerds, whether you evaluate the resto restont -- >> mr. chairman, this goes back to the bindings from three mile island required at that time the new fema created in the reorganization that president carter signed that under the nuclear regulatory commission regulations fema was responsibilities for administers the preparedness program, which was to work with local and state governments, and at this particular program, the terman and base upon finings after three while island. they are not specific to the reactor but to the regulations ang the regulations require that planning for individuals is based upon a ten-mile planning zone around the facilities when an additional 50-mile planning
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zone for what is determined to be ingestion or possibility of food pathway risk. these plans has are din and require to be certify for the plan are conducted on a recurring basis against the standards and regulations. it would be something where the nuclear regulatory commission would make determinations as to modifications to the distances or actions taken. our job is to make sure we work as execute the protective mesh es which may include evag wags, decontamination, health is everying and other that officials would wake in the .. an accident occurred. >> so let me ask you the baseline question. maybe the circumstances answer it, but if an event like t-- if they're heard here in the u.s., would fema be prepared to respond?
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>> given what we're seeing there,s it would go, i think, far beyond what we currently have in our radiological program. fortunately, we built a lot of capability with the national guard, with the department of defense, but also with the local hazardous materials teams that received these grant fundings. particularly when we look at the threat of itch pro vise ed vise capabilities that norcom has to vee spond's in is respond to these team that would be the lead of the nrc. the ability to monitor that as a team effort, ability to do decontamination and support the evacuations. there's a lot more capability that goes beyond what we have and the safety flam couprogram could be brought to bear.
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mainly because of improvised devices or disposal devices. >> that's an important answer and i hope people are listening, i find. reassuring. one is we live in a world with a lot of risks, but the capabilities to respond to a terrorist attack involving here in the united states, those capabilities also obviously can be brought to bear in the case of an accident such as the one, or a natural disaster such as the one we're watching in japan now, which may already is, but may have significant radiological consequence. i think it's very important to state that since -- well, since 9/11, and intensely since katrina, we've developed extra capacity that fema can bring to bear, particularly wing the defense department. as you say, the response teams,
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which are right there and probably apart from local responders, and secondly, specialized skills and specialized units that are stood up at the national level with the defense department to come in and deal with the radiological consequences of such an event. i guess my question is, have i got it right? >> yes, sir. it's what we call a multilayer all hazard approach that many of these teams that were originally designed for commercial nuclear power plants actually give locals the capability to respond to other threats, conversely the funds and building of the teams respond to the threat of a disbursal device that gives us more capability to respond to any i vent that cevent that cann accident. we try emphasize, when we bead thighs capabilities oftentimes we're belding them against known threats or in a case of terrorism. the ability to use them for things you did not expect,
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greater than what you planned come back to the heart of what we're trying to get to. planning for likely maximum events and realizing that it takes the ability to leverage all resources not necessarily has the original plan was but how they could be utilized at part of the team if we saw this type of event. >> finally, i yield, i'm under my time, under northern command, the command of our military, which has responsibility now for homeland security, we have two units, 4,500 people in each one. one active duty. one reserve. they are specially trained to respond to events of this kind and to get there as quickly as possible. certainly with the window you talk about. thanks. senator collins? >> thank you, mr. chairman. administrator, you pointed out that the nuclear regulatory convention would be the lead agency if the united states were
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to experience the kind of accident or level of damage at a commercial nuclear reactor that is occurring now in japan, but fema under the national planning scenarios is responsible for the operational planning under a number of scenarios, one of which is a major earthquake. another is a nuclear attack. another is essentially a dirty bomb. what has fema completed the operational plans for those 15 scenarios that clearly outline the -- outlines the roles and responsibilities of all of your partners? in other words, is it really clear who's responsible for what if, got forbid, we had the kind
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of multiple catastrophe that japan is experiencing right now? >> in looking at the 15, planning scenarios, and i think some of those show that there's actually if i think, collapsing some of it down to one of the things we respond to that are similar and what are the unique authorities that are different across this. this comes back to when we're doing the all-hazard planning and looking at the catastrophic, we're actually looking at an improvised nuclear guise. the earthquake scenarios. and in looking at, what are the total nun r numbers of casualties, impacts and response to support that and going back to the authorities of which federal agencies would have different pieces of that? one of the things you'll note that the nuclear regulation and regulatory agency is responsible for the power plants, but if an event occurs outside of that, that's not a regulated facility, that's actually the department of energy that has the lead on
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the radiological response. it's our ability to go tluz these and look at to see where we have the authorities. 345 make sure they're clear and part is in the exercises. we most recently conducted exercises looking at nuclear power plants and looking at where those authorities are there and what we would operate under. going through the scenarios, that's what we're doing is. going back and submit that in writing because each scenario has various components completed or have been completed for the planning scenarios. >> mr. skinner, mr. jenkins, are the rules an responsibilities clear in your judgment under the 15 that the operational plans is not yet pleaded for? i'm sort of answering my own question, because if it's not completed it's unlikely to be
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cleared. what's your assessment, mr. skinner, i'll start with you. >> first of all, we haven't done a stud ty to determine the clary of this. they were able to determine the responsibilities are becoming clearer, and this is a direct result, i think, of the result of the confusion we witnessed after hurricane katrina and people have sat down in a room, and started more clearly defining who's on first, who has the operational responsibilities and who is in charge. in that regard, after katrina, we have feel comfortable that the clarity of rules are becoming clear. again, a lot of these things are not complete. so it's -- we're really trying to use a krcrystal ball to predt how it's going to play out in the future. in regard to earthquakes, that administrator fugate referred to
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and as well as nuclear tests, results of some of our exercises with regards to nuclear detonation, and hurricanes, major hurricanes, ef-5 hurricanes, those, as a result of that work, we feel that the roles are relatively clear. >> mr. jenkins, do you agree? >> i do agree with that. definitely there's been progress made but one of the issues we're concerned about, and until you get these plans completed, one of the things that's important for state, local and other, what's the fatality of the roles across the scenarios and what are the capabilities that need to carry out those goals and responsibilities effectively? it's really important to know the totality of that. this is what i'm responsible for. this is the kind of capabilities i need to build. >> mr. skinner, you put out a report in december that revealed that fema had stopped attempting
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to recover improper disaster assistance payments that were made after hurricane katrina and rita. and you identified approximately 160,000 applicants that had received improper payments totaling more than $643 million. is this in addition to the improper uses of the $ 2,000 debit cards given out in the wake of hurricane katrina? >> it is. it is in addition to and also does not include those cases of fraudulent activities that we investigated. i'd like to make clear something that senator landrieu made reference to, simply because you filed an incomplete application or have an unclear data on your application does not automatically put you in a
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bucket of a fraudulent applicant. it puts new a bucket as a potential ineligible applicant. >> and there's a difference. absolutely. >> i'd like to make that clarification. >> i'm pleased that you did, because i was going to ask you that very question. i want to ask you a series of questions about that, but since my time on this round is almost expired i'll wait for the next round. >> thanks, senator. thanks for being here. >> wouldn't miss it. i don't think i have, actually. so -- happy to be here, obviously appreciate you holding this. a report published in the, in a boston paper indicates that the bay state nuclear power plant is the second highest in the nation for the potential suffering core damage from an earthquake. any of you familiar with that report at all? >> no, i'm not. >> no. >> mr. chairman, senator, i
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think i'm familiar with the -- is think the ranking of the power plants? >> right. >> the one done by the nrc that went back and reranked the probability of events? >> yes. >> i've seen that report, sir. >> so in light of that, my number two, apparently, you know, has there been any efforts by any of you at all to reach out and make sure that we're squared away? >> senator, we work with what's going on inside the plant, the regulatory part of that, the nuclear regulatory commission, but around each one of the licensed nuclear power plants, fema support local governments to do the exercises they do for certification and exercise in drills for those plants. so unless we -- this really goes back to the report is from nrc. what we do at fema, prior to this report, based upon regulatory requirements to do the exercises and things we exercise against. that's an ongoing program. i'm not sure what the nrc is,
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with this report, what, if anything, would change from that. regarding the plant. >> if pi want to find that out have to reach out to them. >> yes, sir. >> okay. let me just backtrack for a second. god forbid anything like this happens. just take this particular plant, it's near the ocean. very similar situation. apparently number two in the country. how confident are you that if something like this happens in the u.s. that you'll have the ability, and i understand apparently from some of the testimony, what i've read is apparently you guys are in charge. in terms of implementing, you're the go-to people now? is that accurate in terms of dictating who does what and who's in charge? an ongoing plan that's developing? >> in response to nuclear power plant, the inside of the facility is regulated by nuclear regulatory commission. outside of the plant is actually the local and state responders with fema supporting them.
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if you have a scenario that resulted in release, the most important thing to occur is successfully evacuate people away from that plant. those the type of things that the exercise plans work on. these are the things that local and state officials train against, and our role of the federal government, to support them we additional resources required in the event of an evacuations had to take place. those are the thing, and i think from a standpoint of your question, if you would like senators to have our staff, reach out with the state and give your staff and update on what the plans are to look at that and get a better idea of what -- that would be great. i'm concerned, who's in charge? i just see in listening and doing some of the work on it, i have a great concern. it's like the left hand is similar to a katrina situation, is going to be, a lot of breakdowns. i know there's been a lot of improvement. i want to obviously make that well known, but now that we're getting to the point where we always seem to be reactionary
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instead of, you know, obviously keeping ahead of the ball game. i don't want to take the thunder from senator collins' comments about the $643 million fraudulent and ineligible, but -- i'm just going to make a statement which is, i find -- i find it amazing that we just give away millions and millions of dollars and really no accountability. if, in fact, we've improperly paid somebody, then we go after it. you know? we get a collection agency, go after it. get our money. give them one-third, collect it, do what we got to the do. i was in a medicare, medicaid, talking $76 billion given out. whether through ineligible or fraudulent. bottom line, there's a breakdown somewhere, and being one of the newer people here, still over a year flabbergasted at nt o -- a million here, a million there. we're fighting for millions.
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my state could use millions, whether it's headstart programs, the fishing industry. i'm hopeful that -- i'd like to hear, i have to run to another hearing, but i'd love to hear, senator collins, like, where's the money? is it coming back? and why did they give up? i don't want to take away from that but i do have time for one or two more questions. the -- when you talk about the all hazard approach, i think it's an extension of what i was just asking. if you could maybe follow-up again with my office or do it off-line, with everything that's happening -- i've been following it, like, what happened in japan, like everybody else. it's just so devastating. i can't imagine that there's going to be one agency in massachusetts who just says, you go here, you here -- i'm concerned not only in massachusetts but throughout the country if something like this
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happens, i'm not confident yet and i'm hopeful someone can give me the information that make sure that we all know what to do. you know? is it evacuation? is it command and control? is it military? i think it's a combination of everything. can you shed any light on my thoughts? >> in timely, i can start and then like to have an opportunity, senator brown -- >> just do that. i don't want to take the senator's time. >> i want to make one point. >> i think you're asking an important question. >> okay. >> i'd urge -- >> many of our disasters -- we always start with who's going to be the closest responders, no matter how big the disaster. it's always the local responders. we saw this, they can be destroyed, in the disaster itself. we saw this in katrina and in the tsunami. the next is the governor and their team including unimpacted communities in the national guard responding. next the federal government. one of the things that is different this committee oversaw
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the fact previously fema would have to wait to call for help before begin mobilizing federal resources including department of feds. this community changed the law no longer do we have to wait until a state is overwhelm pd even if there's an appearance they may need the help, we can mobilize resources. a key thing, as a coordinated effort with the local official, governor and their team and then the president's team as directed under the homeland security act, stafford act, to coordinate federal assistance so that governors don't have to go shopping to federal agencies to figure who's coming or who does what. this is one thing this committee focused on after katrina. had you to make sure the governor then responsible for coordinating response in their state has that one place that's going to coordinate on behalf of the president, all the federal resources including the department of defense in their disaster. >> i'd love to talk to you off-line. maybe someone from your staff and i can connect. >> am i not right that once a
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year fema and the nrc and perhaps local officials go through a dry run about a disaster at every nuclear plant in the country? or am i -- is that right? >> it's actually a little bit more than that. we do a formal evaluation exercise where we actually grade the operator and the local government, state governments and that's every two years they actually have to be certified. any deficiencies or areas requiring correction have to be addressed. they perform about four drill as year. those could be anything from a decon exercise, we're actually taking vehicles, how you'd watch them down or monitor, the warning systems or other parts of the plan. generally, they also have practices built into that cycle. rather than just every two years do one exercise, there's a series of drills and exercises and then the evaluated exercise is where they're actually graded on their able to perform those functions and again, it's done against those regulatory
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functions that say you have to warn the population in this amount of time, from the time the event escalates. you have to be able to shelter and evacuate the populations with these time frames, be able to do all of these things against the population at risk. it's actually based, who lives there? what's that population? >> right. >> it's adjusted to that particular community and that local and state government response. >> so in the case of the power plant in massachusetts, there is a plan, if something should happen? >> i would imagine if you went to the local phone books you could actually find a map. this is generally how we do stuff, get information out, people know if you live inside this zone, this would be an evacuation zone. you'll generally find outdoor warning systems, sirens, telephone notifications systems, emergency alert system tied to that area. you'll find the local responders have a lot more equipment for radiological monitoring detection than you would normally find. these are things because these are, again, point-specific
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hazards that we plan against and you exercise against, they're very well known to the local officials and the state officials who do that planning. >> thank you. senator? >> thank you very much, mr. chairman and senator collins. thank you for holding this hearing. i also want to extend my thank you for witnesses for being here today. i would like to recognize fema, particularly region nine, administrator nancy ward, for collaborating extensively with hawaii's civil defense and joint catastrophic planning. she does a great job. my home state of hawaii in the pacific territories face unique challenges, as you know very
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well, because of the remote locations and limited logistic base in hawaii. so there is still much for us to do, and i'm so glad that we are having this hearing. administrator fugate, as you know, states rely on neighboring states to provide critical assistance in the event of a disaster. however, hawaii is over 2,000 miles from the mainland. so other states may not be able to provide timely support. fema has a disaster supply warehouse in west oahu, and one in guam. should a major disaster strike hawaii, either damaging the warehouse or overwhelming our supplies, what plans does fema
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have to help quickly resupply the hawaii warehouse? >> thank you for that question, senator, and also i have to thank the state of hawaii and the hawaiian national guard who helped us respond to the america samoa when the tsunami hit there. the challenges, again, as we know, in the pacific, the distances require us to both leverage what we have in the fema warehouses, but also our close coordination with paycom, pacific command and their resources. nancy ward, you point out, one of our regional administrators, starts to talk with counter parts in hawaii or in the territories, in the event we see something coming, again, we know the distances, we know we can't wait. we are looking at how we'll start to ship or fly resources in. this is the close coordination we have, the ability to charter aircraft and work with the department of defense for those most critical supplies. as you remember in america samoa, one of the key issues the
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governor had was generators and couldn't wait for them to come by barge because he had to get his critical systems back up. so we were able to task initially d.o.d. and later extractors to fly the generators in there. it goes back to the authorities. this can be vested. we know we have tremendous distances we oftentimeses have to make decisions when we have requests or all the information to start moving. particularly in the most critical life safety, life-saving supplies, because we won't have time to make up. so those are the contingencies plans. in guam as well as hawaii, we base those supplies on the time 2-it-would take to ship supplies recognizing if they are impacted we would actually be flying supplies as soon as airfields were available. >> well, i'm so glad that relationship with the military really makes a good difference. administrator fugate, as was
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evident in recent events hawaii and pacific territories face the greatest tsunami hazard in the united states. the national oceanic and atmospheric administration manages federal tsunami detection and warning efforts and partners with the federal agencies to reduce tsunami risks. how is fema working with noaa to coordinate tsunami preparedness and response plans? >> we work very closely. as they are the subject matter experts on the hazard and then supporting the states and territories as they map their inundation zones, one of the areas we help them in in their new mexico ready progra tsunami ready programs is in the warning systems. the governor did not have a tsunami warning system prior to the last event, particularly the outdoor notification systems which we saw worked very effectively in hawaii during the
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last crisis. so we continue to work with noaa as they give us the warnings to activate through our national warnings system was how we originally got the calls out to the states and territories we did have a tsunami warning and working with the grant programs we provide for them to build and develop the warning systems. this is the other part of looking at where we are making progress with the homeland security funds is building warning systems for these type of events that fortunately we had a lot more warning. as we saw with american sow mow wh , the mapping and understanding of those hazards are key so local officials have the information about how far you have to evacuate and supporting them through the warning tools we have so we can warn that population in time. >> administrator fugate
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according to census data nearly 25 million adults in the united states do not speak english well. fema must communicate effectively, of course, during disaster response and recovery with the large and diverse population of nonenglish speakers. my question to you is what steps has fema taken to make sure that it can do so? >> we continue to look at our populations, and one of the concepts that is not new, it's actually i thought was pretty much a reflection of what this committee was trying to drive it, we needed to quit planning for easy and plan for real. eng lush doesn't cut it if i'm deaf and hard of hearing and all i know is american sign language and all you gave me is closed captioning and that's not my prime language.
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if i don't get the information i need. we work very closely with our state and local partners to look at the languages and needs and recognize that we have to make sure that we're providing information in the way that people need it, not what's convenient to us. and so we have worked to provide more and more of our preparedness information in multiple languages. we have created in addition to our website, a full site in spanish as well as ensuring in the various languages in our states where they have identified significant populations that we provide preparedness information in those languages. that we have those language skills available to back up our registration centers. most importantly we understand that american sign language is a language we have to communicate in and we can't depend on text messages or text crawls to reach that population. >> yes. well, i thank you very much for the work that you are doing and the responses you have given me on my questions and i wish you
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well. >> thank you. >> thank you very much, mr. chairman. >> thanks, senator. the reports that i have seen, administrator fugate, indicate as a result of the earthquake and tsunami in japan there are more than 400,000 people who have been forced from their homes and are living in emergency shelters or with relatives. apparently another 24,000 or 25,000 are stranded. obviously, these are the nightmare memories we have of katrina with people pushed out of their homes and not an adequate system to give them shelter. i know that fema recently signed an agreement with the american red cross to co-lead efforts for mass care and sheltering after a disaster, including what we called today a catastrophic disaster. what's -- what will be the capacity in most parts of the country? in other words, i know 430,000
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is an enormous number, but how many people will under fema's current organization will we be able to shelter who have been made homeless by a catastrophe? >> mr. chairman, a lot of times that's going to be based upon the state and the type of hazards they have. in the state of florida where i came from, we had shelter capacity getting up to over 800,000, but we would not expect to use that because very rarely would a hurricane produce that big of an evacuation, but i think this comes back to what the general accounting offices is really coming back on. when we talk about preparedness, unless we're planning against a number, we don't really -- it's like how do you get traction because everything is always localized or state-based. so in our strategic plan when we said we're going to do all this stuff, i said put a number against it because i can't measure it. so we started looking at if you look at our -- what we call the maximum maximum, you look at improvised nuclear device, the
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most catastrophic thing we could think of in a metropolitan area, if we looked at our worst category five hurricane hitting the most populated areas, we looked at large earthquakes, what are the upper end numbers? and we start finding the numbers actually look primarily at the numbers we're seeing from japan, we're actually -- we were actually looking at these types of numbers. >> that it would be potentially over 400,000 or in that range? >> yes, sir. we have looked at for casualties requiring medical assistance several hundred thousand. this is why we're trying to plan our logistics to move to the area we know we have a risk and also where we didn't see it coming but it's there. for about a million and a half. can we get enough supplies and provide enough capacity. what may happen su may not be able to shelter people in the surrounding areas. you may have to move people to where you could shelter them.
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that's one of the advantages of working with red cross is other organizations. we saw when we were in katrina, we could move them to areas out of that that. this is in the short-term shelter phase of getting people where we're meeting the most basic needs of medical care, food, water, and a roof over their heads until we can see what's next. is this some place we can get back to or in the case we're seeing there, this devastation will not be repaired quickly. you're not going to be doing temporary housing there. you're going to have to find a longer term housing solution as people make a decision about what's the next step. >> so are we prepared now to temporarily house that number of people? >> i think we could say it would not be in any one area. we'd have to distribute those folks across the country, but these are the things we're planning against, and i think this is where we're looking at what does it take to get there and how do we build that capacity based upon the local and state but where do we fill the gaps. if you go to certain parts of the country, yes, they have that
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canability because of the threats they face. what if it occurs somewhere we weren't expecting that, we sill have to meet that need. this is where we're trying to go with national preparedness is looking at take these events, add them up, and go what's the upper number? can you move enough supplies in to provide emergency food, medical care, and basic sheltering for that population, and if you cannot bring it to them, can you take them from that area and get them to where you can. it becomes critical when we're talking about housing. this is what we're planning against and also looking at the time frames to do it. >> did you have a response you wanted to offer to that? i noticed you -- >> i agree. fema from the lessons concerned with katrina has taken some very positive steps towards short-term housing, sheltering and short-term housing, and they're also experimenting with different types of housing, and it can be a very complex issue. one of the concerns that we have we're witnessing now after
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katrina and as well as the disasters in florida is not the short -- the sheltering or the short-term housing but it's the long-term housing. and that's the issues that i think need -- still need to be addressed and there's still some thorny questions or relationships that have to be built to accommodate the population for its long-term housing because these things will often times last, two, three, four years before you can move back home. >> right. thanks. you know, one of the things our committee has done h we feel various times we've got to ask kind of extreme questions, and we've done some hearings and work on what our preparedness would be to respond to, as i mentioned earlier, the explosion of a radiological device by a terrorist or a nuclear weapon. and one of the striking conclusions is that how people behave in response to that can
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actually save tens of thousands of lives. in some cases a decision not to run to evacuate will save your life. and we heard expert testimony that what's particularly critical, and, of course, it would be critical in the case of an event at a nuclear power plant as well, is public messaging. so i wanted to ask you, administrator fugate if you could give us a status report on where fema is on effective messaging to the public in the case of a radiological incident. >> mr. chairman, the first thing people have to understand is that as surprising as it may be and this is what the experts told you, a nuclear debt nation is actually more survivable than people realize if they know those important steps. what we started doing, and it
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kind of got overshadowed, we did what we call a webinar with our citizen corps program with the department of energy, and their experts started talking about messaging and sheltering in place and working with our citizen corps councils. so we did this as part of a webinar to really start bringing up these topics that have historically been so difficult to talk about. we often times didn't. trying to break this and get over it and say, look, if this does happen, these are the things people need to do. this was a webinar that was done this week where we brought people in and it allows us to bring people into an environment where we can have suggest matter experts briefing them. starting this process using the citizen corps councils thinking about how do you message this locally, what is going to be effective, and there's actually a book with this title "how do you think about the unthinkable" and communicate that in a way that's not based on fear. so we're working with the
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department of energy experts, their national laboratories are really who are the experts. we were conducting this webinar this week on how we work with our citizen corps councils and talk about something that's very difficult to talk about. >> so that's a work in progress now. >> yes, sir. >> but obviously you are working on it and i presume you would train all the local areas around the country to use both existing communication systems, public ones like radio and tv, but also obviously now internet and cell phone and the like. >> yes, sir. again, how do -- this is what i really challenge our team on. there's a tendency we make people xun kat the way we're set up to communicate and do not always recognize there are different tools and the people aren't using the same tools we are. how do you start incorporating that in and look at how people communicate versus the way we are prepared to do it. so looking at things in social media and other tools that --
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i'll give you a real short example because i know we want more questions. we provide information to the public on web pages. most disasters if i'm evacuated in a shelter, do i have a computer and a web page i can get to? but i may have a smart phone. we've seen that many of our events, the phones are actually working even in haiti after the earthquake surprisingly, so we went back and said let's quit making people go to a web page when if they're going to be on a mobile phone, let's change our delivery. we created a mobile fema page that works well on a cell phone. you don't need to see any of our pretty pictures or graphs. you need the information about what's happening. we're trying to look at how people are using these tools, what makes sense, how are they going to get information and try to put it in a way that was useful to them, not in a way that's convenient for us. >> good work. that's very sensible. senator collins. >> thank you, mr. chairman.
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mr. skinner, in your testimony you gave us the depressing news that fraud and improper payments have plagued fema for a very, very long time. i remember when i was chair of this committee back in the good old days that i held a hearing to look at fraud after hurricane andrew, and we found improper payments and it was senator bill nelson who suggested that we have those hearings. then katrina hit, and we found out just terrible -- hundreds of millions of dollars in improper payments, fraud, and abuse. it's troubling to me that you can go back decades apparently and there's still a lack of
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attention to this problem. i was thinking about the fact that the president's budget cuts fema's budget, and it cuts it in ways that may actually be harmful because it cuts some i.t. projects out. but what is even more disturbing to me is perhaps these cuts wouldn't be necessary if we hadn't lost more than $1 billion over the years in improper payments. certainly that money could be put to better use. could you help guide us on what should we be asking fema to do, what kind of controls should be put in place so when the next catastrophe inevitably hits, we don't see a repetition of widespread fraud, waste, and abuse? you referred to the work that
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was done with the stimulus bill, and i agree with you that the transparency and the accountability was much better, but what specifically would you recommend be done? >> i think, first, administrator fugate coined it very concisely. that is we need to be -- fema needs to be fast but not haste, and with regards to the individual assistance programs, there's a mindset or a tendency that we have to have the money out on the street and we have to have it out within hours, and, therefore, we will make payment, a blanket payment, and worry about the fraud later. unfortunately, fema doesn't have the resources or the wherewithal to go back and look and try to get payments that were improperly distributed. so if we impose internal controls, now, it may slow the process up a few hours but not days or weeks or like the old
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days in hugo where it took months to get payments or andrew where it took weeks or northridge where it took weeks. we can still make timely payments to those that are deserving that are in need but at the same time be able to offer a screening process and have the internal controls and red flags in place to put aside those applications that are in question, whether they be just because of poor information or because it's a fraudulent application. second thing is i think with the public assistance programs we can do a better job there as well with regards to providing our oversight. the recovery board under the -- for the recovery funds, the $800 billion, were able to produce reports -- we required anyone that's going to receive any funds, any state or local or
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primary contractor at the subgrantee level is going to receive any funds, they must report to the recovery board. and the system is already in place. anyone can use this system. department of energy introduced this system years and years ago, and it's something i think maybe fema might want to consider because i believe, and this is what we believe at the recovery board, is that transparency drives accountability. what you don't have a just one ig looking at you, you have millions looking at you a because when the local citizens see where the money is going, how it's been spent, they can report in there's something amiss here, that the money is not going where they say it's going or that contractors are receiving preferential treatments or are not performing as they should be. that's what drives the accountability. if we can produce that type of reporting after a disaster and train the states and locals, and it's not difficult, everyone thought it would drive costs up,
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it did not. the technology today now allows you to take that information and transform it into very usable formats that can be manipulated for your own personal assessments. reporters may want to take the data and manipulate it to determine what type of demographics certain funds are going to. state and local governments could take it to see what type of projects -- are we spending money in the -- in education versus highways or airports, things of that nature. it can be now manipulated to meet your individual needs, and at the same time we at the recovery board developed a screening process to assist program managers, and that is when contracts are awarded, we can take those contractors -- we can take a look at those
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grantees, run them through open source information as well as closed source information, law enforcement information, and give you some type of association, whether these firms have association with companies that may have tried to defraud the government in the past. and we're able to stop those grants, those contracts early on before money was spend because once the money is spent, it's very, very difficult to get it back. >> don't you think there's also a deterrent effect when you announce that there's going to be an aggressive effort to prevent waste, fraud, abuse, mismanagement, improper payments? i think one reason that the recovery board was successful largely is it was set up from the beginning, it was very well-publicized. there were websites to track spending and enlisted the public
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to help be the eyes and ears. but i would also argue there's a deterrence impact if you go after some of the fraud. i know fema has argued that it's too expensive to go after some of this, quote, small dollar fraud that in a cumulative sense is huge amounts of money, but, in fact, i think it's worth the money of going after it because of the message it sends that it's not going to be tolerated. >> absolutely. and i personal witnessed that after andrew, after northridge, after katrina. a good example is in northridge we tried to early on get anywhere from a dozen to two dozen arrests within the first two weeks after the checks went out. when we made those arrests, we publicized it in the radio,
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television, newspaper. within days $20 million, $30 million was voluntarily returned to fema saying, i received these funds in error. i witnessed the same thing after andrew, after we made four arrests the following day, $11 million was returned to fema. they thought they were next. it has a deterrent effect. also when you're transparent the last place you want to steal money from is -- a contractor does not want to be stealing recovery funds because of the transparency that exists there. we know where it's going. we're watching it. we're able to do screening, and so that in itself for those contractors who have bad intentions to steal will often times back off knowing it's just too risky. mr. fugate, you've heard what mr. skinner has said, that it is
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worth going after this money. i realize you were not administrator at the time of katrina, but, in fact, there's been a new bro ses that the chief counsel had for recouping improper payments that's been languishing since late 2008. yesterday we received word that fema is going to start implementing the new process, but that's a long gap. that really sends the wrong message. so i guess i'm asking for you to give a commitment to put in those internal controls. i think it's a false choice between providing the money quickly enough and providing it in a way that guards against fraud. in today's world with the technology we have, that's -- it's not an either/or
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proposition. so i want to encourage you, i'm going to ask you are you going to go after some of these improper payments? >> the answer is yes. particularly those recoupments where we know that we had duplication of benefits and if it was fraud, i think they would agree if i found fraud as soon as we know it, we refer this and those that did this willfully need to be treated as fraud. where we have those who have lack of information, duplication of benefits, we seek reimbursment. the idea was correct in that it has to be speed, not haste. the question is why are we giving them money? i think it's not the size of scale to reassure you that it would scale up, but in the floods in tennessee where we i believe it was about $100
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million in assistance in the first 30 days. nobody got a check unless they registered, had their home inspection, and they received their funds. and, again, we were working on speed. we got the inspectors in there. often times the turnaround time was several days. and we also worked very aggressively with hud to go into the shelters because these people that were in shelters were going to need disaster housing assistance and get them into the disaster housing assistance programs. so i think that we -- it was not to the scale we saw in katrina but many of the things that say we want to have a positive var fi vation that you're actually living where you say you were, that we had the inspector get there, verify the damages, and, again, as we go through this and look at the recoupments on that disaster, did we drive that error rate down. and the other piece of this is again in responding if we can achieve the goal of meeting
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those basic needs and decrease the need to defall to the financial assistance, which certainly is a sign you can't get supplies in, you're not able to get enough critical infrastructure up, and you're not meeting basic needs so what you're going to do is give money to people and say go figure it out yourself. that comes back to that aggressive response at the front end and look at the financial assistance not as the primary tool but to help them as they move into the first steps of recovery. >> weren't those $2,000 debit cards just an invitation to improper spending? i mean, look what they were used for. firearms, bail bonds, diamond rings, entertainment. they weren't used for food, water, medical supplies in far too many cases. should we be giving out $2,000 debit cards with few questions asked? >> i think, you know, the senator -- >> you weren't there at the
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time. >> i think the senator makes a point that again i think this is something the ig can go back and say in hugo and andrew and other cases, if you're not meeting the basic needs, that's often times the fallback and it does invite a lot of challenges. >> i want to hear a no on that. we're not going to give out $2,000 debit cards. >> we're not doing debit cards, and that program went away. but i have to be cautious in going, there are those situations where we may not be -- an example would be the tsunami itself. we may not be able to get in to do home inspections. so we may have to look at other ways to verify that people lived there. this is where the ig has given us recommend dags to use tools like using the types of things you do when anybody is applying for a loan. utility bills to verify it. where as everybody in this zip
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code is going to get assistance. we may not be able to do an inspection. are there other ways to minimize the number of people applying for assistance by showing us some way they were in that area without necessarily be doing a home inspection but where we can it makes it very, i think, efficient to be able -- i have asked for help, i have an inspector go to where you were living. i think that's a huge step to reduce the level of fraud and then often times we will see if it was ineligible or duplication of benefits because of insurance not because we were in such haste. >> i realize i have gone over my time. >> not at all. it was important and the answer was no about the debit card program. as i look back to hurricane katrina, first off we had an extraordinary natural disaster event as, of course, has happened in japan.
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but part of what happened is that all levels of government, including the federal government and fema, did not act quickly and preventablely. and as it became clear that that was so, particularly with the television coverage and everybody became horrified about how people were being treated or not taken care of on the gulf coast, in some sense the government overreacted and started to kind of throw out assistance in a way that was just terribly wasteful and was also inviting fraud, and that's just what we got. mr. skinner, do you want to comment on that at all. >> i think it's exactly what happened. it's the same thing after andrew because the cavalry was slow to arrive and the best way to treat the situation was to get funds out on the street as fast as possible whether you were eligible or not.
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>> yeah. and something you said earlier, mr. fugate, about getting supplies out there, meeting the needs. once you do that you don't have to start throwing debit cards or money around. >> the other issue is because the amount of funds we provide are really not designed to make people whole, the less money that we give them incrementally that takes away from the total amount, because it comes back to the issue if they lost eferl, don't have insurance, you want as much of that money going to their recovery not their immediate needs. this also comes back to the preservation of what the intense of these funds were. it's never been the intent of congress to make you whole after a disaster. it's to help you start recovery. if we're putting these funds out ahead of type and they're not getting to you that point, it decreases the ability to support people when they really should start now to manage things on their own and be able to use these funds to start that rek
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recovery process. if the basic needs aren't being met and we are in this situation, we go from being fast to a lot of haste and then that in turn leads to fraud, waste, and the inability to really make sure we're good stewards of the funds. we put a high premium on this idea of stabilization and speed to support this and drive then the next steps of that initial recovery with these funds so they're going towards the intended purposes. >> right. do you want to respond to that? i wap nt to ask you one factual question which may be of interest to people watching. there's been a certain amount of confusion about what the potential danger is to the u.s. from the nuclear plant problems in japan and particularly as the
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media has been following the last few days and the sense that the pocket of a meltdown at one of the plants or an explosion, the emission of a large amount of radioactivity goes up. people have been worried about the extent to which the west coast of the u.s. particularly hawaii obviously guam, maare th subject of danger. >> i'll refer back to the statement made by the chairman. in looking at all these scenarios they do not see any radiation reaching the u.s. that would be of a danger or require prodeck tiff actions. they have a system called rad net that 24 hours a day, seven days a week monitors various channels, air, water, other types of things across the
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country. and so if we were to detect, we may detect things well below levels that require any action, but we did not have any monitors in our territories, particularly gu guam. so we were in the support role, epa is in a lead role. they deployed monitors out to augment that network they already have as well as supporting alaska with additional monitors. this is a two part. one based upon the scenario that the commission does not see this reaching the u.s. territories or the west coast but we also had an active monitoring ske that epa expanded to be able to do active monitoring to provide that information. the epa is gep looking at this not that we think we're going it get something but we have to be able to answer the question, are you testing, are you monitoring, are you sure?
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this was the decision to send these monitors out to guam and the commonwealth of the northern marianna islands and the aleutian islands. >> as i understand it, we have more than 100 existing monitors on the west coast. >> you can go to our web page and look at where the sites are. and what they monitor and the purpose and history of the program. >> so i presume that just trying to be helpful that people including on the west coast should not yet be taking potassium iodide pills because right now there's no risk and there is some slight risk of side effects from those pills. >> yes, sir. as i understand it, the public health departments are telling people this is something they should not be doing, there's no
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indicator to do this, and their recommendation is that people not take potassium eye o dine in this event. as you point out there, may be other concerns. both state health offices are telling people they do not recommend this and they would not want you to take this based upon this event because they don't see where there would be any need and we do have the active monitoring that is taking place now. >> i appreciate those answers. i hope they're helpful to people. i think the three witnesses. senator collins and i were commented to each other that in a sense we were conducting two hearings at once, one on the ig's report and on the management of fema and the other on what's happened in japan. we tried to bring them together. i appreciate the patience epps of the witnesses. i appreciate the work on of
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thenesses. all of the comments will be included in the record. we'll keep it open for 15 days. senator collins, do you have anything more? thank you very, very much. with that, the hearing is adjourned.
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[inaudible conversations]
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10:04 pm with gas prices averaging more than $3.50 a gallon a house hearing today good goes into the issue of the energy policy. witnesses included the current head of the u.s. energy information administration as well as a former chief at that agency. washington republican dhaka hastings shares this two and a half hour hearing. [inaudible conversations] >> with the committee will come to order. the chair announces the presence of a quorum. today the committee on the natural resources is here to hear the testimony of harnessing american resources to create jobs and address rising gasoline prices. domestic resources and economic impacts. under the rule 4f opening statements are limited to the chairman, ranking member of the committees so they can hear from -- so we can hear from the
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witness is clearly so i ask unanimous consent any member that desires to have an opening statement in the record shall be granted. without objection, so ordered. the chair will recognize himself for an opening statement. every american is feeling the pain from the rising gasoline prices. there's no escapes at. it costs more to drive to work and run errands. it costs more to take the kids to school. even those who don't own a car are paying more for groceries and other goods because the transportation cost to get products to market. the natural resources committee has jurisdiction over all federal land both onshore and offshore. what this is where the majority of americans energy reserves are located and also where the obama administration has done the most to block energy production. the purpose of today's hearing is to examine how to harness these energy resources on federal land to help create jobs and address the issue of the rising gasoline prices.
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a recent report from a congressional research service detailed just how large our energy reserves are in the united states. our combined recoverable oil, natural gas and coal resources total 1.3 trillion barrels of oil equivalent. the largest in the world. more than saudia arabia, china and iran. and this figure doesn't even account for the vast oil shale reserves in the west, which the u.s. geological survey estimates to be greater than 1.5 trillion barrels of oil. the best way for the united states to insulate themselves long term from unpredictable world events and rising gasoline prices is to produce more energy here at home. we have the resources to produce our own energy and we have the best and the latest technology to accomplish it safely. but for some baffling reason, this administration is choosing
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not to do so. since the president earliest days in office, his administration has blocked, delayed, hindered and obstructed energy production across america from coast to coast, onshore and offshore all the way to alaska. this administration has canceled leases in utah, the late oil shale production and colorado, in pos de facto moratorium on the gulf of mexico, block offshore energy in both of the atlantic and the pacific coast, retroactively to truth the coal mine in west virginia, blocked energy production on the tribal land for what the country and in people offshore and onshore production in alaska and the list goes on and on. all of these actions cost american jobs to lead to higher gasoline and energy costs. incredibly the president and the white house have been telling a very different story. but the rhetoric doesn't match the reality. the white house has even been
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touting statistics on increased u.s. oil production. they are trying to claim credit for actions that took place long before president obama took office. an increase in oil production today is the result of the pro energy policies of the previous administrations, not this one. less production, higher gasoline prices, jobs being shipped overseas and deeper dependence on foreign countries these are the real results of this administration's policies. i'm full believer in expanding american energy from solar and wind to hydro and biomass. however, oil and natural gas and coal are in trouble parts of our daily lives and argues for far more than just fuel and transportation. they enable millions of americans to heat their homes in the winter. they are an essential ingredients in prison plastics, tires, farm fuel lasers, computers and other high-tech devices. evin blackberrys and iphone is that members of the staff can
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never seem to put down are in this category. i announced yesterday my intention to introduce bills the will help produce more energy by putting people in the gulf back to work and reverse this president's offshore trawling than. these will be the first of several bills the will be introduced. we are working on an array of specific proposals introduced as part of american energy institute. so, really it all comes down to one very simple choice. do we want to produce our energy here in america and create american jobs, or do we want to jeopardize our national security by deepening our reliance on foreign countries for energy? to me, the answer is not a difficult one. so, with that, since i see the minority some of their members are not here, in fact i now know why. one of the ranking members on the floor of the house i see so modern innovation has allowed me to see that.
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you don't see it but i do. [laughter] and so when he comes back we will give him the opportunity to make his statement. i advised we are going to have the votes here in the shortest ten minutes that happens in this process. but i want to call the first panel and icrc to. we have the honorable richard, administrator of the u.s. energy information administration. bring the price come energy resource coordinator for the u.s. geological survey. mr. genomic me, manager of the energy research congressional research service. dr. michele, chief energy economist at the university of texas. mr. caruso, senior adviser energy and national security center for strategic and international studies and mr. frank rusco -- i had two choices and i missed the first one. director of energy and science
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issues for the gao. so we will proceed with our panel right now. and i'd like to recognize richard toole, and i might mention that under the rules we have here we have a timing mechanism. you're full statement will appear in the record, but i would like to ask you if you keep your oral testimony to five minutes. when the green light is on it means you have to be could have up to four minutes and when the yellow light is on this 30 seconds and when the yellow light goes on i would ask you to close your remarks if you could. so you are recognized for five minutes. >> thank you mr. chairman. i appreciate the opportunity to appear before you and the committee today. the energy administration is the statistical analytical agency in the u.s. department of agency. the eia doesn't take positions on policy issues and has independence with respect to the information and analysis we provide. therefore our views shouldn't be
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construed as representing those of the department of energy or other federal agencies. starting on the near-term outlook for the oil and gasoline markets the eia expects the prices over the next two years particularly in light of recent events in north africa and the middle east, the world's largest oil-producing region. our latest forecast issued earlier this month projects regular gasoline at the retail pump will average $3.70 per gallon this summer and $3.56 per gallon for the entire year, which is about 77 cents per gallon higher than last year's level. there is significant regional variation in the gasoline prices and there's also sycophant on uncertainty surrounding the forecast as discussed in my recent testimony. the market might be affected by the issues considered in this hearing is important to recognize the important differences markets for oil and natural gas. the price of oil and gasoline produced from it generally reflect conditions on the world
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oil market including the global balance between supply and demand and concerns related to actual and potential disruptions. in contrast, the price of natural gas is largely determined by the balance of the supply and demand in north america pure yet for this reason i would like to address natural gas and oil separately starting with natural gas. in 2010 the overall u.s. natural gas production increased while prices were generally stable. we expect the trend to continue although natural gas prices can be volatile often due to weather-related events. the current u.s. natural gas market reflects the tremendous growth in the shale gas production which more than doubled between 2008 and 2010 and 2010 represented 22% of the total natural gas production in the united states. u.s. proved reserves of natural gas grew by over 63% in the last decade and have now reached the highest level since 1971. the eia sees considerable
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potential for the continued growth in the shale gas production with shale gas to supply nearly half of the u.s. natural gas production by 2035. the eia's annual energy outlook preference case which assumes the continuance of current laws and regulations and the increase in the natural gas production over the next 25 years with u.s. net imports of natural gas expected to fall from 11% of the consumption in 2010 to only about 1% of consumption by 2035. because the domestic shale gas resources are located primarily under the private and state lands we would not expect access issues on federal land to have a major affect in the projections for u.s. natural gas production reserves or prices. let me now turn to issues surrounding oil production in the markets. when considering the effect of changes in the future production it is important to recognize the resource access doesn't typically translated immediate or near-term production.
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in addition, the impact on market prices depends only on the magnitude and timing of actual production flow, but also the magnitude relative to global liquid supply which is currently about 88 million barrels per day. in the short term, oil markets react, constantly react to competing factors in the global context and it is extremely difficult to disentangle the near-term impact of the made to long-term involvement in the context of oil markets that see typical daily price movements in the range of one to 2% and much higher fluctuation at that time. long term we would not expect additional volumes of oil what could flow from resources on federal land due to greater access to have a large impact on or oil and gasoline prices. this is due to the globally integrated nature of the world oil market and the more significant long-term responsive text of oil demand and supply to the price movements compared to the short term responsiveness. given the increasing importance
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of opec supply in the global oil supply and demand balance, another issue is how opec production would respond to any increase in the supply potentially offsetting any direct price effects of increased u.s. production. of course, greater domestic crude oil production the matter what the cause be increased development, higher resource potential in the fields or wider application of advanced technology what impact local economic activity and net oil imports. my written testimony provides additional information on the eia's estimates and projections. mr. chairman and members this concludes my testimony and i would be happy to answer any questions. >> that is absolutely perfect timing, mr. newell. [laughter] if that is a template for how we are going to do that this is going to be a wonderful during. [laughter] thank you -- thank you very much. now the pressure is on ms. pearce. you are now recognized for five minutes. >> thank you, mr. chairman and members of the committee for the
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opportunity to appear today to discuss with you the u.s. geological survey role in studying, understanding and assessing domestic energy resources. the u.s. conduct science investigations and assessments of geologically based energy resources including conventional and unconventional resources. the mission of the u.s. -- usgs program is to understand the process is critical for the coordination, accumulation, occurrence and alteration of the geologically based energy resources to conduct scientifically robust assessment of the resources and to study the impact of the energy resource occurrence and or production on the use of the environmental and human health. the result from the scientific studies are used to evaluate the quality and distribution of energy resources accumulation and to assess the energy resource potential of the nation exclusive of the federal offshore waters and the petroleum resource potential of the world. one important goal of the usgs domestic energy activities to conduct research assessments of undiscovered technically recoverable oil and natural gas
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resources of the united states exclusive of the federal outer continental shelf. the amount of the undiscovered technically recoverable resources changes over time because of advances in the geological understanding, changes in technology and industry practices and other factors. this necessitates the resource assessment be periodically updated and taken into account the advances. recent examples include usgs of the balkans for asia and the u.s. portions of the basin. this assessment released in 2008 shows an estimated three def 3.4 billion barrels of undiscovered technically recoverable oil compared to the usgs's 1995 estimate of 151 million barrels of oil. our geological understanding of the basin he evolved since 1995 and significant technological advances redefined what was technically recoverable in 2008 compared to 1995. another kid was the usgs as some of the gas hydrates from the alaskan slope. as the result in the understanding of the emerging resources, the usgs assessment
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estimates the mean of 85.4 trillion cubic feet of technically recoverable gas from the gas hydrates on the alaskan slope. research and challenges remain to determine if the technically recoverable resource will be economically recoverable but the current multi organizational including the usgs and multi disciplinary efforts focusing on the overcoming of obstacles. usgs is conducting its systematic inventory of the technically and economically recoverable coal resources of the significant bids in the united states to provide a comprehensive estimate of how much of the nation's coal and all it is actually for the development and available under the certain market conditions and mining concerns. the first base and us west is the river basin of wyoming and montana. the usgs as some of the powder river basin will be the most thorough comprehensive inventory of the nation's most significant base and to date. this inventory with the others on the schedule will provide policy and decision makers with important information of the valuable planning tools. the usgs also evaluates renewable resources such as the
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geothermal industry. they recently completed a national resource assessment the first one in more than 30 years. the usgs assessment indicates the full development of the conventional identified systems could expand the geothermal power production by about 260% of the current land total in the united states. the estimate for the unconventional enhanced geothermal systems is more than an order of magnitude larger than the combined estimates of both identified and undiscovered resources. if successfully developed they could provide an installed geothermal electric power generation capacity for about half of the current land power generating capacity of the u.s.. energy resources assessments are traditional strengths of the usgs. they will continue to seek ways to expand its research and assessment portfolio to better include comprehensive suite of energy resources. their resources assessment and research can provide valuable
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information for the public and government discourse about the energy resource of the nation. the usgs looks forward to working with congress and examines the challenges and opportunities. thank you for this opportunity to provide an overview of the usgs research assessments of geologically based resources and i would be happy to answer any questions. >> thank you very much. this is an all-star panel i tell you. [laughter] next dr. jean of the energy research you are recognized for five minutes. >> mr. chairman and members of the committee on behalf of the congressional research service i would like to thank the committee for its invitation to testify today to address the subject of rising gasoline prices and domestic resources. domestic energy production printer but to the economic vitality of the nation and reduce its reliance on foreign energy resources. much of the energy production takes place on the federal land
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or federally owned our continental shelf. congress has worked hard to ensure resources to double on federal land provide revenue to the american people through the least purchased rents and royalties. but energy production like many industrial process these involved some risk to human health and safety and to the environmental quality. thus numerous laws have been passed in recent decades to ensure energy production in the united states is done in a safe and responsible manner. policies have been established for statute and through federal agency will making to provide a controlled access to federal land and regulate the activities of energy production. the purpose of my testimony today is to describe the responsibilities and authorities of the federal land management agencies and through that description to outline the process is that energy companies must navigate in order to
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export, develop and produce oil in the united states. there is an ongoing tension between the expansion of energy production and which companies seeking access to federal land and water to find and produce oil and regulation by federal agencies to ensure that the exploration and production proceeds safely and with minimal environmental impact. the tension has been especially high in the week of the deepwater horizon event. access to the onshore federal land for the energy exploration and production is managed primarily by the interior department's bureau of land management and by the u.s. service in the department of agriculture. resources on the federal outer continental shelf are managed by the bureau of ocean energy management regulation and enforcement in the department of the interior. each of these agencies develops land use plans and resources management plans that determine how and when a federal land and
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offshore areas are developed. the plan for onshore development seek to accommodate the uses of public land including energy mineral development, grazing, recreational activities, timber harvesting and preservation of wildlife habitat and waterways among others. offshore development and must coexist with the fisheries, shipping, recreational the activities and preservation of marine ecosystems. resource management plans are developed with public input and must comply with the requirements of the national environmental policy act, the endangered species act come here and watervliet to leave the water regulation and several other applicable statutes and regulations. each resource management plan includes a schedule of energy and mineral leases for the planning units. the leases for oil and gas on federal land and offshore are sold at public auction. the winning bid for a particular
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parcel purchases the lease and gains the right to produce oil and gas from the area. the holder must pay rent on the land and royalties are paid on any oil and gas produced. a portion of the royalties is shared with the state's. the owner of the least must obtain a permit to drill on the lease. the permitting process is also guided by a number of laws and regulations including several new requirements instituted by the interior department after the deepwater horizon incident. the process of approval on an application for a permit to drill is affected by the ability of the federal agencies to process the application as low as the ability of the permit applicant to meet the requirement for approval. other and on procedural issues may delay or prevent wheel and gas development from proceeding on a particular lease including a shortage of drilling rigs or other equipment, shortage of skilled labour or issues associated with the company's
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financial strategy. legal challenges against the government or against the energy company might also delay or prevent the development on federal leases. in summary, the process of leasing federal land and water, the approval of permits to drill and the logistics of exploration production are lengthy and complex process these subjects to a large number of laws and regulations which make simple characterization's of the overall process difficult. thank you for the opportunity to provide this information on behalf of the congressional research service. i would be glad to answer any questions. >> this is -- i have to tell you i am impressed with these three witnesses that have hit on the mark. we have to come up with an award i think for that. >> if the chairman would yield we should point out that as the witnesses come on time with their testimony we judge testimony on both content and quality. [laughter] and on both scores they are
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doing well. well i'm glad you said that because the next person to testify is the ranking member -- [laughter] who wasn't here. we have been called to vote but we have time and i want to give the courtesy to mr. markey to make his statement and then we can go to the bolten and come back. mr. markey, following mr. rosh's lead. >> thank you and happy st. patrick's day to you. the reference in the title of the hearing to harnessing american resources is appropriate because we are in a horse race. but rather than a blanket of roses at the finish line, the winner gets much more valuable prizes, lower unemployment and lower energy prices for american families. there are two horses in the race, the old horse that has been running flat out for
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decades is natural baby drill. it is owned by a syndicate of the richest international oil companies in the world and opec. the second horse, a much more recent entry in the race is clean energy. that horse is owned by the american people in partnership with researchers, investors and companies developing new technologies to produce energy from wind, solar, geothermal, highest row power, biomass and other renewable sources to get our republican colleagues in claims about the race but they are handicapped in is highly suspect. first they say they want a fair race and claim they would be happy to see both forces when. it is is they're all of the above claim that the truth is our republican friends have taken a terrible risk. they've put it all on just one horse. they bet billions of dollars in subsidies and tax breaks not to mention that in our economy and future all on the natural beebee
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koza -- drill baby drill stands on seven hearings based on drill baby drill and 01 clean energy. the republican majority also claims that the obama administration is pulling back the reins on drill baby drill. the trouble with this administration is riding the horse as hard and fast as ever. republicans want to debate permits or a curse or tenure projections, but let's just cut to the chase. the amount of oil and natural gas produced from our public land has gone up every year of the obama administration, period. ..
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know how many subsidies or tax base the day, the price at the pump remains beyond our control. the harder we with the worst worst comes to further the finish line seems. at some point, we have to face facts. the republican energy policy amounts to nothing more than beating a dead horse. so what might happen if we get serious, clean energy out of the gate? well, the first thing you need to know is that clean energy can catch up because it is incredibly fast. just think about the speed of the arrival of the internet for
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the last time between directory dial phone when this country puts its mind to something. i'm rachel bebe cho, the longer that clean energy run, the cheaper it gets. is it worthwhile for solar this is a timely double production to the cost of solar panels dropped 18%. the investment we make is the best that we've ever made. the most important clean energy we can win -- the most important is that it clean energy can win this race. while trilby be drilled is in place, clean energy is moving forward. this horse will create new jobs, american jobs, developing american tech elegy. and this can cut energy prices by reducing oil imports. if we unleash green energy, let her out of the starting gate, we will find ourselves in the winners circle in no time at the
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country, looking over our shoulders at number two in three of the world. that is our opportunity and that is the conclusion of my opening statement with 17 seconds left to spare. i thank you, mr. chairman. >> europe to the challenge. i think the ranking member for that. we have two votes. the committee will stand in recess until approximately 11:00. hopefully we can do it before that, but no later than 11:00. the committee stands in recess. >> the committee will reconvene and we will continue with our panel and i went to thank all of
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you for bearing with us while we have votes on the floor to introduce.your thoughts. your recognize. >> thank you and i think members of the committee for inviting me to serve as a witness. hydrocarbons are exceptional commodities that it proves living standards and quality of life. they are commodities and surprises are variable. races are variable for many reasons including actions and events. we are at a time in which events are exceeding expectations about christ is without leaves us with the number of questions. what do we do about this? had we managed it? what kinds of things we think about? to me, one of the most important things is to ensure the domestic can remain abroad. it's as if a charter for the industry and government.
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a good way to start is by understanding the business cycle. ivo and many people like me, tend to view the interview cost structure on the basis of full breakeven costs. not just what it costs to sink a drill bit and truly well, but stay in business. somebody has to be carried by companies to do what they do, to hold ended torry, regardless of whether it's public or private leases, to pay for geological and geophysical staff -- engineering staff, to explore, to do research and to your family ready to do a chilled bowl prospect. full breakeven finding and development cost for high and have been raising for a number of reasons. part of it is because they are abundant. resources are everywhere, but they are -- kosovars are complex
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and so i complex and so it commits a cost of extracting additional barrels per cubic feet of gas from those resources can be lived. as long as we have the high and rising original cost or, then we will have price variability. so how do we manage the high and rising costs for? what are the kinds of things we can do? one is to look at where we can increase production volumes because the more that you can produce for a given dollar invested, the better off you're going to be. natural gas offers one way to do that. we have an abundant natural gas base. it also has high structure, but we can already see improvements being made to bring costs down. we can understand the cost the company states are affected by many names. policies, regulations and other issues. we can understand that companies need access to resources in
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order to be able to maintain portfolios that can be used to develop prospects. replenishing production is an essential part of maintaining competitive foreignness in the domestic business. protecting private property rights and ensuring access to private plans is just as important as ensuring access. our show cast has succeeded largely because of private mineral ownership and the ability to negotiate access of private owners. but we have to look at our public lands in the gulf of mexico and reach a point in which we can feel comfortable we can responsibly manage access to those forces, maintain critical science and technology base for offshore exploration and continue to push the production renaissance we seem to be having in the united states in typical of mexico.
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we can also be problematic history of. we have an interesting situation in which domestic crude is lower than international crude into a large extended because of infrastructure. we need to continue to expand oil and oil products pipeline, not just within the united states, but across our borders. we also need the socioeconomic benefits the industry provides. and these are large and varied and includes jobs, not only directly in the industry, but also indirectly through service companies and local investments in procurement. the industry pays taxes. the defection of the larger taxpaying entities. i want to just how the committee's attention to "the wall street journal" that matched her own research on this to the degree to which the petroleum industry pays up to one third of affected taxes for the united states. much larger than internet-based companies, which is interesting to think about because i don't
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think i can put a spoke in the gasoline tank. the final thing is to understand better how energy affects transportation system and the differences between some of the clean energy options we would like to pursue and energy values in gasoline. thank you. >> thank you very much, dr. foss. next we will go to dr. caruso, study for -- you are recognized for five minutes. >> thank you, mr. chairman. good morning to members of the committee and a thank you for the opportunity to give my views on the global oil market and implications for u.s. energy policy. 2010 with a strong year and global market, so we go into this period of political unrest in north africa with a fairly strong arc with prices breakout of a range of $75 to $80 a
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barrel, which they were in most of last year to over $90 before the unrest began. we saw most forecasters expect dean allowed him to be a year in which prices would challenge to the $100 range. so this is a strong market we are in. and i think we now have the situation in libya were about 1 million barrels a day had been destroyed to. last year, opec began increasing demand. non-opec supplies were increasing. and that's going to continue. most forecasters now believe that given the uncertainty about libya and whether it will spread are now looking maybe two at $10 or $20 to that price.
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we have seen already between five and $15, depending on your views of a pure premium in the oil market. despite these demonstrations, the most important concern is will it spread to algeria, were demonstrations have existed, even to places like saudi arabia, which so far has been a spirit of any disruption. we have the capacity to meet the 1 million-barrel a day decline in libya. if it spread, who will most likely require and the president has said that the administration has prepared to use the spr, should that become necessary. assist in marketing to adequately supplied rate now.
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i think that the proper course. but continuing monitoring, continuing working with partners within the iea and others in the oil crews and communities, probably the right thing to be doing now. however, the spr is a powerful tool, should this disruption increase and it could be used to manage the exit patient a further risk, which is out there. and should the disruption expand may well be necessary in court nation with their partners in the international agent the tuc sbr. opec countries have said they are prepared to add barrels to the mark in saudi arabia has said he done that. over the longer term, of course, we have any issues that of arty
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pin in many statements here. i'm both a of the equation, reducing demand through efficiency and the increasing supply. i think it is important that the u.s. energy policy recognizes the long-term nature of the investments on both sides of the equation that michelle outlined. come on the playa site. on side, there are a number of things that we need to keep doing, especially improving efficiency and automobiles through policies like café standards and other incentives, certainly using market mechanisms to incorporate the externalities of both security and environment into the price that we pay to facilitate development of natural resources that's the important work of this committee. and i think the infrastructure
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needed to develop things that was mentioned as a potentially large resource for domestic oil and gas. it is important that facilities be encouraged, things like imports from canada should also be cursed as well as continuing to improve on the amount of money spent for r&d to link to detect allergy and innovation that both of your opening statements indicated would be required. there are many other specifics, but i'd like to leave that for the q&a and once again thank you for the opportunity to be here today. >> thank you very much, mr. caruso. next we'll go to mr. rusco, accountability office, you're recognized for five minutes.
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>> thank you, mr. chairman and members of the committee. and please to speak with you about department of the interior oil and gas produced on federal lands and waters. in the context of economic impact of these domestic resources, the department of the interior manages the federal lands and waters for oil and gas exploration development and production. these activities provide an important domestic source of energy for the unit pace, create jobs and oil and gas industry and raise revenues that are shared between federal, state and tribal governments. oil and gas exploration and development tv has been correlated with oil and gas races over the past 80 on federal lands and waters has generally increased. however, during the same period, interior has found it difficult to strike a balance between encouraging domestic oil and gas production on one hand, and on
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the other, maintaining operational environmental safety and providing reasonable assurance that the public's financial and other interests are being taken. i will focus by remaining remarks and out into your can improve its management practices and implementation of laws and regulations to provide reasonable assurance that the interest are protected in that development of federal lands for oil and gas can continue in a timely and efficient manner to contribute to the nations stability. interior has struggled to higher train people with enough skills to keep up with its regulatory responsibilities. for example, in 2005, the reported blm staff could not keep up with increased applications to drill. the agency ended up pulling staff were hired to do national environmental lack reviews to instead applications to drill. in 2010, we found the staff is he unable to keep up with the
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increase for a associated with public protest a proposed lease is envious approval -- lease approvals were late, which created uncertainty in costs for oil gas companies. improving interiors could lead to better protection of the environment as well as issuance of leases. interior does not have a centralized process for improving use of the type ologies of oil and gas leases. at best, this post on the process for improving the tape allergies that can improve oil and gas production and a brisket prevent new technologies from being deployed or allow an appropriate technologies to be used. further, interior has not been consistent across field offices in completing production verification inspections and oversight, leaving uncertainty about whether the public is getting a chair oil and gas revenue. creating more consistent
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practices and interpretations of laws and regulations that benefit both the public and oil and gas companies. revenue collection is a broader concern. and to does make, we reported that interior has not comprehensively evaluated its revenue collection schemes in over 25 years despite significant changes in the industry. the current revenue collection scheme is complex, including payments from companies such as bonuses paid for the right to develop a release royalties for gas found, corporate profit and other taxes and land grants as well as subsidies including royalty relief, tax credits and favorable depreciation schedules. interior is currently undertaking a comprehensive study of the system and we hope there will be ways to simplify and improve the complex schemes for the public can have confidence it is receiving an appropriate share of revenue that oil and gas companies
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continue to view the united states as a desirable place to do business. inclusion, regulation and management of federal, oil and gas exploration, development and production should have two important goals. one is to protect the financial and other interest of the public and provide confidence that oil and gas development is safe and environmentally sound and to reduce uncertainty in any unnecessary regulatory burden on oil and gas industry. striking the appropriate balance between these two goals as importance of the country can continue to enjoy the economic and strategic and effective domestic of domestic oil and gas production. thank you. i'd be happy to answer any questions you may have. >> thank you, mr. rusco. and again, i said this earlier. i really do think the panel for adherents. that is very, very helpful and if they mention your full singable appear in the record. we'll begin questioning then i will start.
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ms. pierce, second stay with you. there's always a lot of discussion about reserves that we have. remember discussions going way back in it seems like when it aeration happens, however it is reserves get larger. i say that's very broadly. boulware and federal lands or waters come up from your research, that currently are not open for development of the largest reserves? could you point out or he cannot fight two or three of those quiet >> so, you probably well know there's a difference between resources and reserves. reserves, which is a usgs does technically recoverable. some of the largest producers are open and are producing. but there are clearly areas offshore and i don't want to avoid your question, but i want to do it justice. and so, i would refer to do for it, to the research, look at resource numbers, with soft ltd.
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provide the answer in writing. >> we want to get accurate information, so that's good. >> and i was going to ask, dr. whitney, you pointed out there's a difference between resources and reserves. and i noticed in mr. whitney's report, they talked about that. could you go more in depth as to the explanation between reserves and resources clacks >> short. >> reserves are amounts of oil or gas that have been proven to it is through drilling. companies use reserves as word of an inventory that they will produce at some point in the future. as those reserves are produced, they add new reserves, either through reserve growth and an existing field or through development of new fields. for that reason, reserve values,
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preserve numbers tend not to vary wildly. they may creep up and down, but over time they don't change very much be keys these are amounts of oil that companies keep in reserve for production. the undiscovered resource is our geological estimate in areas that either have not been trailed or include some field, but extend beyond the seals. those geological estimates are based on several geologic fact there is within the base in the region, such as the existence of a source route that is rich in carbon, most experienced thermal histories for oil or gas and there must be the existence or potential existence of reservoirs and traps.
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so there is a comparison between undiscovered resources and the resources that have been produced in other basins. there is an estimate that is derived from statistical treatment of the parameters and compared to production in other basins. the undiscovered technically recoverable resources re: geological estimate. either way, because they recoverable, the number changes as technologies evolve. >> is it fair to say with a comparison then that just in general, resources -- a book that quantifies much larger than reserves because you know pretty much represents our? >> that's right. and reserves typically are composed of volumes of oil that are moved from the undiscovered
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category to reserves and into production. >> i guess that's why hearing in the past when people are talking about the term used. it always seemed to exceed because resource insert after but. >> that's interesting. i appreciate that. my team is going to expire and so i yield to the ranking member, mr. markey. >> thank you, mr. chairman. my republican colleagues like to say we are not doing enough trailing in the united states. a lot of the numbers that have been tossed around by witnesses of fundamental point that i believe our country must comprehend. we have 2% of the world's proven
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oil reserves. we improve 11% and we consume 25% of the world's oil on a yearly basis. 60% of the reserves, 11% of the oils produce, 25% of the oil we can soon. now, i've put together a graphic to help us to take these numbers together and understand what they mean. this is the noblest tradition at the rate at which our country is producing its reserves and compares arab or an rates to of the other top 15 oil-producing countries in the world. what do we learn? no other nation on earth is matching the burn rate of the
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united states in terms of consuming their own reserves. we consume more than any other nation. we are burning through our savings, our reserves faster than any other country on the planet. as you can see down here, and iraq, then assail the, they have very low birth rates. in the long run, is a shot which obviously is going to cost our country great problems. i guess what he has to you, mr. carissa, is the burn rate of our reserves sustainable over the long-term? yes yes or no? >> ultimately, we will reach the peaking point and we did reach that in 1872 in terms of
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domestic reserves. how long can it go? it can be a very long tail, but clearly we will be, based on anybody's forecast, we will be importing a significant amount of oil for his falling out as can see. >> mr. rusco, do you agree? >> know, unless we discover some new reserves were developed more reserves -- it can be sustained, but at most likely declining. >> and do you agree, mr. rusco? >> yes, inevitably at any rate of production, we will eventually reach a total be followed followed by a decline.
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we have reached a peak, but they are maybe a long tail. there's a lot of hydrocarbons out there and we don't how fast will be a lot to produce them. >> which countries are the oil-producing countries in the world? which of these countries benefits in the long run most from the fast burn rate of the united states in terms of its oil reserves, mr. caruso? >> well, the opec member countries at the ones that have been most determined to manage the praise. they aren't always successful, but clearly i would say in general, opec countries are benefiting. >> do you agree with that, mr. rusco? >> yes, i would say that loyalty in a global commodity, in some sense, it really doesn't matter where the oil is produced.
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price is determined by oil demand globally, and the benefits and costs of that accrue globally. >> in this context, the faster we burn down our reserves, the more powerful in the marketplace those that have massive reserves the balance of the century will have in terms of influencing the price in the market for the work of the cartel, which united group that, mr. rusco? >> i agree i agree about the cousin successfully managing the price and that is a long-term strategy. >> but gentleman stands at higher. i now recognize the gentleman from louisiana. he met thank you, mr. chairman. first of all, went to complement the panel because this is some of the most cogent and formative stuff we've had in a long time
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here. you know, we are approaching in some cases past $4 a gallon for gasoline. and just as the law of gravity of everything must come down, the same applies to pricing for commodity. it's all about supply and demand. we do see some spikes at times when there are disruptions or economic issues that may come up. the underlying pricing is all about supply and demand. what is interesting is that to the two worst analogy, where you have alternative energy reasoning the fossil feels for hydrocarbons, what we see particularly is an explosion of discoveries we didn't know we had. and also with new technologies that can exploit to get to those we have in unable to


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